Developer confident project will take off - East Valley Tribune: Business

Developer confident project will take off

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Posted: Thursday, January 29, 2004 12:46 am | Updated: 6:04 pm, Thu Oct 6, 2011.

Hopes for refurbishing a high-profile building in downtown Mesa are looking up as the developer expressed optimism Wednesday he will be able to begin construction in March.

Donavon Ostram, managing director of Tempe-based Outsource International, said he is "as definite as we can be at this stage" that rehabilitation of One Macdonald Center, the former Bank One building, will begin within two months.

The developer faces a Feb. 23 deadline to arrange financing for the project. The date was set by the Mesa City Council when the company was unable to obtain financing on satisfactory terms by the original Dec. 8 deadline.

The city owns the fivestory building, which has been empty for several years, and has designated Outsource International as the developer. Under the agreement, the city will sell the building to the developer for $1 and Outsource will take responsibility for renovating it — a project that is expected to cost $4 million to $5 million.

Outsource has hired Lee and Associates to pre-lease as much of the space as possible so the developer can obtain more favorable financing terms from potential lenders. Ostram said he hopes to have at least half of the building pre-leased by late February, but even if that goal isn’t reached, he said he is determined to go ahead with the project.

"We’re committed to delivering financing assurance to the city on or before Feb. 23," he said. "The pre-leasing issue only has an impact on the terms of the loan. The more we can pre-lease, the more favorable the terms."

Mesa bought the 59,000-square -foot building for $1.5 million in August 1997 as a downtown redevelopment project, but several previous efforts to sell it failed. The building, built in 1961, was gutted during a city-financed $500,000 asbestos removal project.

Mark Pierce, a partner in Lee and Associates, said he is close to pre-leasing nearly three floors of office space and also has made progress in finding a restaurant tenant for the ground floor.

"It has been getting quite a bit of attention," he said of the structure. "The city is going through some exciting redevelopment projects. This is one of them, and people want to be a part of it."

The company is quoting $23 a square foot as the rate for renting space, which includes utilities and insurance. Pierce declined to identify potential tenants but said they are professional and financial service firms.

If the project goes ahead as scheduled, it will be ready for move in by late November.

The city plans to improve Macdonald between Main and First streets in conjunction with the building rehabilitation, said Patrick Murphy, senior redevelopment specialist for Mesa. The city will time the street construction to be finished when the building is ready for occupancy, he said.

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